One of the most prominent crypto players in Latin American has raised $62 million to help fuel its expansion in the region.
In a press release shared with The Block, Mexico-based Bitso said that it closed a $62 million Series B round, led by QED Investors and Kaszek Ventures. The round also included participation from Coinbase and Pantera Capital. The firm declined to share the valuation at which the raise was conducted, as well as recent revenue figures.
In 2016, the firm raised $2.5 million in a Series A1, according to Pitchbook. At the time, the firm had only six employees and was valued at $10 million. The firm expanded its headcount from 80 to 200 employees over the past five months.
According to chief executive officer Daniel Vogel, the fresh injection of capital will allow the firm to build out its presence in Brazil. In an interview with The Block, Vogel said participants in the round see Brazil as a strong growth opportunity for the firm. Already, the firm offers services to "large traders" and institutional clients in the country.
"Everything in Brazil is bigger than in Mexico," he said. "Yet no exchange in Brazil is larger than Bitso is in Mexico. So [our investors] see a big opportunity replicating what we've done in Mexico and bringing that in Brazil."
The exchange has some experience doing just that in Argentina, according to Vogel. Since its expansion into the market in February, Bitso has grown its market share to more than 75%. The expansion into Brazil could help the firm reach its goal of doubling its user base of 1 million in 2021, according to a spokesperson for the exchange.
Bitso's business extends beyond that of a traditional exchange business of matching buyers and sellers. It also has been expanding its reach in remittances and will soon launch additional financial services products, such as interest-bearing accounts and collateralized lending. In the long-run, Vogel said that he thinks the latter two business lines will drive revenue growth for the company.
"The exchange business is one where trading fees continue to collapse," he said. "In the long run, that is going to be a difficult business to monetize."
As for remittances, the firm has facilitated more than $1 billion worth of remittances in the Mexican/US corridor since the beginning of the year, according to Vogel.
In February, Vogel told The Block the firm could make up 20% of the $35 billion US-to-Mexico remittance market by the end of 2020. Vogel said "Covid-19 slowed things down a bit."
While the firm is likely to fall short of that goal, he said the introduction of U.S. dollar products to countries like Brazil and Argentina could be a "game-changing" development.
"Even though the exchange business has been the largest one, financial services for retail and cross border — we believe in 2021 — will be the fastest growing," he told The Block.
Disclosure: Pantera Capital is an investor in The Block.
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